» Most content available on European web sites is free to access. All this free information is invariably funded by ad revenue. This ad revenue comes mostly from contextual buys but over the past two-to-three years behavioural advertising has been key revenue driver for some publishers. And as we move towards audience-buying the cookie will become even more important to the overall success of online advertising. So it puzzles me why the EU wants to kill the cookie, and ultimately free information on the web.

Privacy is important and essential. But surely having appropriate ads targeted to you is a small price to pay for all the free content European publishers produce. Shouldn’t the industry be lobbying the EU a little harder about the positive aspects of targeted advertising? Has there been enough coverage around this topic?

The recent recommendations by the EDP Supervisor do not bode well for the online advertising industry, as it seems almost as mad as the mandatory opt-in for cookie access. The office suggests in an opinion paper that all new browsers should have mandatory privacy by default setting:

Need for further action, notably providing for mandatory privacy by default settings

As described above, web browsers commonly allow a level of control over certain kinds of cookies. Currently, the default settings of most web browsers are accepting all cookies. In other words, by default, the browsers are set to accept all cookies, independently of the purpose of the cookie. Only if the user changes the settings of his/her browser application to deny cookies, which as described above, very few users do, he/she will not receive cookies. Furthermore, there is no privacy wizard on the first install or update of browser applications.

A way to mitigate the above problem would be if browsers would be provided with by default privacy settings. In other words, if they would be provided with the setting of 'not acceptance of third party cookies'. To complement this and to make it more effective, the browsers should require users to go through a privacy wizard when they first install or update the browser. There is a need for more granularity and clear information on the types of cookies and the usefulness of some of them. Users willing to be monitored for the purposes of receiving advertisement will be duly informed and they would need to change the browser settings. This would give them an enhanced control over their personal data and privacy. This would be, in the EDPS’ view, an effective way to respect and preserve users' consent.

I know this has been said to the point of boredom but the information that cookies collect is anonymous: the data that a display ad is targeted against is based on a text file sitting on a user’s machine. Granted EU citizens should be protected against certain kinds of erroneous data collection, but there has to be some consideration for online publishers who require retargeting to increase revenue from advertising. There is a cost in producing content. Would the EU prefer to see pay walls pop up around all online information, shutting out its population? Would it like to strangle the digital media industry in Europe before it hits its stride? We are talking about billions of euros, and a sector that could create millions of jobs. There has to be some trade-off for free content – and all cookies are not evil. Maybe the EU should start talking to some publishers in the market and get their feedback? Maybe legislators should be asking: will this law affect your business and will this affect the future growth of the digital industry? Is self-regulation a better route than forced legislation?

Another reason why this is such a short-sighted piece of legislation is the impact it will have on online advertising innovation. Now I know I’m being biased here, but killing the cookie will severely hamper agencies and advertisers ability to buy audiences, will put a halt to the idea of trading data (can you see now why Exealte and Bluekai have stayed out of the market?), and will limit the ability to target online advertising effectively.

By passing this law, the EU risks losing competitive advantage to companies in other markets. We have about one more year of innovation and then its lights out unless the EU can be persuaded to row back on some of the detail in the new legislation. With so many trade organisations in our industry you’d think they’d coordinate efforts to win over the hearts and minds of European law makers. Clearly we need to work a little harder on our message and PR. The cookie is not evil – it’s just misunderstood. [EPDS]

» It seems behavioural targeting actually works. According to a study carried by the NAI (National Advertising Initiative) the conversion rates were more than twice as high as typical contextual ads. The research was carried out in association with twelve US ad networks (a total impartial view then). Good news for publishers too, as average CPM rates for behavioural ads increased by 108%. Performance ads only represented about 18% of the total $3.3 billion dollar revenue earned by the twelve survey ad nets. The research is being viewed as an attempt to sway the opinions of US regulators who are due to introduce online privacy laws. It would be good if the IAB attempted something similar here in Europe before our industry gets killed off by the cookie-hating bureaucrats in the EU. [Forbes]

» Downlaod the Natioanl Advertising Initiative report on behavioural targeting here.